2020 (10) TMI 496 - Tri - Companies Law

Approval of the Scheme of Amalgamation - Sections 230 to 232 of the Companies Act, 2013 r/w the Companies (Compromises, Arrangements and Amalgamations) Rules, 2016 - HELD THAT - The Regional Director, Northern Region, MCA, to whom notice was sent has filed his affidavit and has filed its affidavit dates 12.01.2018 wherein it is submitted that the Transferor and Transferee Companies are regular in filing statutory return. It is further noted that no prosecution has been filed and no investigation/inspection proceedings are conducted against any of the Petitioner Companies. It is further observed that the objects of the Petitioner companies is different and any change in the main object and the name of the Transferee Company shall be automatic and compliances are to be made as per the provisions of Companies Act, 2013 and Rules - The Official Liquidator (hereinafter referred as OL ) has filed a report dated 18.01.2018, wherein it is submitted that he has not received any complaint against the Scheme from any person/party interested in the Scheme in any manner and that the affairs of the Transferor Companies do not appear to have been conducted in a manner prejudicial to the interest of its members, creditors or to public interest. The report of Income Tax Department (hereinafter referred as ITD ) had been filed on 07.02.2018 in which it is submitted that with regard to the Transferor No. 4 Company that the revenue receipts are nil for the assessment Year, while borrowing is huge i.e. in Crores. It is noted that the Petitioner has replied to the objections raised by the ITD and submitted that the Transferor Company No. 4 is facing losses from last few years and therefore has decided to merge with the group companies. Further, it is submitted that as per the audited financials there are no borrowings which run in crores and that the transferor No. 4 Company has filed balance sheet and profit and loss as on 31.03.2017 - It is further noted that the Petitioner Companies have duly complied with all the Accounting standards applicable thereto. The Petitioner Companies have obtained necessary certificates from their respective Auditors certifying that the Accounting Treatment under the Scheme is found to be in order and conform with the Accounting standards. On the Scheme becoming effective, the Transferor Company shall be dissolved without any further act, deed or instrument, without going through the process of winding up and shall be succeeded by the Transferee Company - There is no additional requirement for any modification and the Scheme of Amalgamation appears to be fair and reasonable and is not contrary to public policy and not violative of any provisions of law. All the statutory compliances have been made under Sections 230 to 232 of the Companies Act, 2013. The Company Petition is allowed and the Scheme of Amalgamation annexed with the Petitions is hereby Sanctioned.

Summary

Issues:
Approval of Scheme of Amalgamation under Sections 230 to 232 of the Companies Act, 2013.

Analysis:
The Company Petition was filed for the approval of the Scheme of Amalgamation involving multiple Transferor Companies merging with a Transferee Company. The Scheme aimed at merging six Transferor Companies with the Transferee Company as a going concern. Each Transferor Company's details, including incorporation date, business activities, and registered office, were provided in the petition. The Board of Directors of all companies had approved the Scheme, fulfilling necessary requirements as per the Bench's orders.

The rationale behind the proposed amalgamation was to consolidate businesses for the benefit of shareholders, creditors, employees, and the public. The Scheme aimed to create synergies, pool technical and marketing skills, enable efficient business management, reduce costs, and optimize resource utilization. It was clarified that the Scheme did not involve corporate debt restructuring and did not affect the managerial interests of the companies' directors, creditors, or shareholders adversely.

Reports from the Regional Director, Official Liquidator, and Income Tax Department were submitted, indicating compliance with statutory requirements. The companies had followed accounting standards, obtained necessary certificates from auditors, and addressed objections raised by the Income Tax Department regarding financial aspects. The Scheme's fairness, reasonableness, compliance with law, and public policy were confirmed, leading to its approval.

Upon the Scheme becoming effective, the Transferor Company would be dissolved without winding up, succeeded by the Transferee Company. The Scheme's approval would bind all shareholders, creditors, and employees involved. The appointed date of the Scheme was set as April 1, 2017. The Order clarified that it did not grant exemptions from stamp duty, taxes, or other charges, emphasizing compliance with relevant laws and permissions.

The Order directed the filing of a certified copy with the Registrar of Companies, dissolution of the Transferor Company without winding up, consolidation of documents with the Transferee Company, and preparation of the sanction Order as per the Companies (Compromises, Arrangements and Amalgamations) Rules, 2016. Consequently, the Scheme was sanctioned, and the Company Petition was disposed of.